Afghanistan: Kabul Currency Market Thriving

The exchange, known as Prince's Market, operates in a courtyard that is accessed through a tiny dark alley, situated in Kabul's busy downtown commercial district. On a typical day it is packed with entrepreneurs who are long accustomed to operating under adverse conditions.

The trading process can be chaotic. The constantly shifting values of the Afghan currency, along with US Dollars, Pakistani Rupees and countless other currencies, are called out to competing buyers and sellers. Groups of men hustle over quickly to make a sale, rushing to complete an exchange before the rate changes. If a scrum makes it problematic for a prospective seller to find a buyer, one might just call out an offer. If it's accepted, then one tosses a wad of cash, sometimes worth thousands of dollars, to the trading partner to seal a deal.

Roughly $5-million-worth of currency changes hands every day, involving hundreds of traders, according to Najeebullah Akhtari, the exchange's president and trader at the market for 26 years. He asserted that the currency exchange is more trusted in Kabul than many banks. He pointed out that even some of the more well-established financial institutions in the capital, including Kabul Bank and Afghanistan International Bank, trade currency at the exchange.

In all, there are 353 storefronts that comprise the exchange, giving the courtyard an appearance somewhat like an old-style American motel. Patrons can exchange funds in a store, where rates tend to remain more stable, or with one of the 800 estimated freelancers who roam the courtyard. Rates offered by freelancers can fluctuate rapidly, rising and falling depending on the mood of the exchange crowd. Shopkeepers must be licensed by Kabul Bank, while freelancers need only to obtain the approval from the president of the market to operate.

Habiburahman, a freelancer, has worked at the market for four years now and is earning about 700-1,000 Afghanis a day (roughly 14-20 USD) in profit. Locally this is considered an above-average salary.

Prince's Market was founded 35 years ago, and has occupied the same location since its inception. Despite Soviet occupation and internecine strife, the exchange has flourished. Even when the Taliban governed Kabul, the exchange survived, even thrived, due mainly to the fact that the radical Islamic movement closed banks. One of the low points in the exchange's history occurred in late 2001, when, shortly before evacuating Kabul, Taliban militants looted the currency exchange shops.

The exchange employs 12 full-time guards. Even so, security seems light. That's the case in part because it is generally perceived not to be a terrorism target. There have been no recent reports of burglary of theft. Akhtary claims this is because the potential thieves are afraid of the getting on the wrong side of Kabul's money men.

Akhtary has high hopes for the market, especially if the US and NATO troop surge succeeds in containing the ongoing Taliban insurgency. The exchange has already set up several branches at other locations around Kabul. Part of the exchange's main operations also recently shifted into a Dubai-style mall, but Akhtari said that activity at the new hub has been disappointing. It seems that traders prefer the hectic ambiance of the old market, and are reluctant to leave for the new location.